Reliance Profit Jumps 28% On 9-year High Refining Margins

Reliance Industries Ltd. (RIL) reported a 28% jump in first-quarter net profit to ₹9,108 crore, helped by higher margins at its refining and petrochemicals businesses and a one-time gain from an asset sale.

Profit, excluding exceptional items, at the energy-to-telecommunications conglomerate climbed 12.8% to ₹8,021 crore, and on a standalone basis rose 8.6% to ₹8,196 crore.

GAPCO stake

Exceptional items during the quarter ended June 30 included ₹1,087 crore as profit from sale of RIL’s stake in Gulf Africa Petroleum Corporation (GAPCO).

Refining margins rose 3.5% to $11.9 per barrel. Analysts had expected a decline in the gross refining margin for the quarter, on the the back of a sharp decline in crude/product prices. The refining business accounts for more two-third of RIL’s revenue and operating profit.

“Our industry leading portfolio of assets in the refining and petrochemicals business contributed to considerable improvement in our earnings for the quarter,” RIL chairman Mukesh Ambani said in the statement. “Retail business also witnessed accelerated growth momentum with YoY revenue growth of 74%. Jio has revolutionised the Indian telecom and data consumption landscape,” Mr. Ambani added.

Mr. Ambani, who will address shareholders at RIL’s annual general meeting on Friday, is likely to announce the introduction of a feature phone priced at ₹500 as well as Jio’s fibre broadband services that would offer connectivity at speeds of 100 mbps.

“Over the past 3-4 years, we made significant investments in new plants, thus creating organic growth platforms for our energy and materials businesses,” Mr. Ambani, India’s richest man, said. “Full commissioning of new PX facility at Jamnagar during the quarter will strengthen the integration within our polyester chain. Ramp-up of ethane import project has helped in diversifying feedstock sources and mitigating risks for our existing crackers at Dahej and Hazira.”

Organised retail contributed ₹11,571 crore to revenue and EBIT almost doubled to ₹292 crore. The oil and gas business saw revenue fall 1.2% to ₹ 1,324 crore, with the division sustaining an operating loss (at EBIT level) of ₹373 crore.

Revenue from the media business fell 8.8% to ₹321 crore with a negative EBIT of ₹41 crore. In a separate regulatory filing, RIL said the company proposes to buy 2.52 crore equity shares of Balaji Telefilms Ltd. (BTL), constituting 24.92% of the post issue paid up capital of BTL, through subscription to a preference issue of equity shares for ₹413.28 crore in cash (₹164 per equity share).

“The result is exceptional on all fronts,” said Paras Bothra, head of research, Ashika Stock Broking. “We continue to remain upbeat on the stock.”

The shares slid 0.3% to close at ₹1,528.70 prior to the results, which were announced after close of trading.

RIL also became India’s most indebted company with outstanding debt climbing to ₹2,00,674 crore as on June 30, against cash and cash equivalents of ₹ 72,107 crore.

R-Jio plans ₹20,000 crore rights issue

Reliance Jio Infocomm plans to raise ₹20,000 crore by way of a rights issue, the company said in a filing.

“The board of directors at its meeting held on July 20, 2017, has decided to make a rights issue of 4 billion, 9% non-cumulative optionally convertible preference shares (OCPS) of ₹10 each for cash, at a premium of ₹40 per OCPS, aggregating to ₹20,0000 crore,” it said. Each OCPS shall be either redeemed at ₹50 or converted into 5 equity shares of ₹10 each at any time at the option of the company, but not later than 10 years from the date of allotment.